Calderdale Council has published its latest financial strategy which warns that the impact of COVID-19 could lead to a funding gap of around £15m next year.
Every autumn the Council publishes its Medium Term Financial Strategy (MTFS), which covers the next three financial years, and this will be discussed by the Cabinet at its next meeting on Monday 7 September 2020.
The MTFS includes estimates of all the funding, grants and income which the Council is likely to receive during this period and this is then used by the Cabinet to make decisions on future budgets.
In recent years we have seen considerable uncertainty around the future funding of local government, at a time when pressure on the Council budget has grown and demand for its services has increased. This year we are having to prepare our financial plans with the added and considerable uncertainty about the ongoing implications of COVID-19.
The Leader of Calderdale Council, Cllr Tim Swift said:
“The past decade has been exceptionally challenging for local government. The Council has already put plans in place to make savings of £115 million by 2021/22 compared to its 2010 budget. And now, with the continuing uncertainty we are forecasting that the saving required in 2021/22 is expected to be around £15m.
“We believe that Central Government should be acting to sustain the vital local services provided by Calderdale to our communities. We will continue to work with other councils through the Local Government Association to challenge the Government to recognise the needs and provide appropriate funding through the spending review. But we cannot count on being successful, and we cannot risk delaying when the potential risks are so high. We have to plan for the worst whilst hoping for the best.
“So we need to take decisive action now. The Cabinet has already agreed a financial recovery plan to address the shortfall we are facing within this current financial year. The MTFS is the cornerstone of our budgeting process, allowing us to identify where savings will have to be made over the next three years.
“And we are developing a Future Council plan to make sure we are able to continue to deliver the core essential services which our communities rely upon in the longer term.”
The MTFS forecast assumes that through the financial recovery plan, existing budget pressures and COVID-19 related costs can be contained in the current financial year. If this is not the case then any shortfall would need to be added to the savings targets in 2021/22.
Calderdale Council’s Cabinet Member for Resources, Cllr Silvia Dacre said:
“COVID-19 is providing a significant challenge to the financial resilience of many local authorities, including ours.
“The impact of this will be felt not just in the current year but potentially for many more years to come and we believe that COVID-19 will result in additional costs next year to the Council of around £9.5m. The World Health Organisation has predicted that the virus is likely to be active within our communities for the next two years.
“We must also factor in the end of the transition period after leaving the EU at the end of this year, which we anticipate will have a significant financial impact upon both Calderdale and the Council.
“This level of uncertainty does mean that we will need to update the MTFS as the impact of both becomes clearer. And it also means that we will have to take some very difficult decisions in the coming years if we are to achieve financial stability in the longer term.”
Government funding for the three years covered by the MTFS has not been announced, although the Chancellor’s Comprehensive Spending Review in the autumn is expected to set new three-year national spending totals.
The Cabinet will be asked to approve the Medium Term Financial Strategy for recommendation to the Council at a meeting at Halifax Town Hall on Monday 7 September 2020. The meeting will be held virtually from 6pm and will be live streamed through the Council’s YouTube channel.
The Council’s detailed budget for 2021/22 will be decided at Full Council in February next year.